NC State Economist Dr. Mike Walden – Is the New Normal Over?
The term new normal, coined a few years ago, applies to our very slowly improving economy. Some economists are upbeat about the economy and are saying the new normal doesn’t apply. N.C. State University economist Mike Walden explains.
“And essentially … what was meant by the new normal is, yes, we’re going to have an improving economy of what’s going to be a slow-motion improvement. And we’re not going to see a great number of jobs created and a big drop in the unemployment rate. And that’s sort of been the case over the last three years.
“But now this year as 2013 begins, there are some economists – not all, of course – who are more optimistic. They see two big reasons for optimism. One is an improved housing market. We really, really need to have in a housing market where sales are up, prices are up, more people buying to get an improving economy, and we’re beginning to see that.
“So, that’s one reason why some economists say, ‘You know, we may be moving to a permanently higher rate of economic growth.’
The other is household finances. Households have worked very hard in the last four or five years to get their debt down, their asset values go up, up. Their net worth is up, and that should fuel better spending particularly because the age on some of our consumer durable goods like appliances and furniture, IT equipment and cars is very, very old.
“So, certainly not all economists are on board with this view, but some say to look for 2013 to be much better than the last couple of years in terms of higher rates and economic growth and a major decline in unemployment.”